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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

Forget about Exits: Europe’s Choreographed Policy Outlook

by | July 31st, 2015 | 02:09 pm

Following the confrontation-driven agreement between Greece and its international creditors on July 12, Europe appears ready for its usual August torpor. European leaders deserve a break. Their numerous emergency summits have stabilized the continent’s outlook for at least the next year, virtually eliminating the specter of a Grexit and lowering the prospect of a British […]

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IMF Exceptional Access and Reform Legislation: Do Not Link the Two Issues

by | July 23rd, 2015 | 09:59 am

In “The Lessons Greece’s Lenders Forgot” (Wall Street Journal, July 10), John Taylor argued that the United States and the International Monetary Fund (IMF) erred in May 2010 by not abiding by the IMF’s 2003 framework for exceptional (large scale) access to its financial support. I argued in a letter to the Wall Street Journal that Taylor did not have all of his facts right about the Greek case and about the IMF’s framework for exceptional access.

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The Growing Gap between Real Wages and Labor Productivity

by | July 21st, 2015 | 02:33 pm

Since 1970, the real wages of US production workers have stagnated, despite the rapid growth in output per worker. This apparent disconnect between labor productivity and real wages is most dramatic when real output per hour is contrasted with real average hourly wages since 1970. While real average hourly wages have stagnated, business sector output […]

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Hopeful Outlook for Greece

by | July 20th, 2015 | 01:54 pm

If Greece implements its reform program approved by parliament, it has a good chance of stabilizing its economy and achieving growth in the years ahead, according to Jacob Funk Kirkegaard. Progress on the structural reform front can then lead to a discussion with European and international creditors about providing debt relief to Greece.

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Germany and Greece: In Victory, Magnanimity?

by | July 14th, 2015 | 06:53 pm

The agreement between Greece and its international creditors [pdf] announced on Monday represents a predictable capitulation by the Greek government from a position advanced for weeks by Prime Minister Alexis Tsipras. Faced with the dire repercussions of an exit from euro area institutions—including a collapse of its banking system and a broader economic disaster—Tsipras accepted […]

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Finally, Greece Has a Chance to Rebound

by | July 13th, 2015 | 04:50 pm

The agreement announced on Monday between Greece and its international creditors—consisting of the Eurogroup of finance ministers, the European Central Bank (ECB), and the International Monetary Fund—is good for Greece. But the process has been detrimental for Europe and for the euro.

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Hold Your Nose and Offer Greece Debt Relief Conditioned on Reform

by | July 9th, 2015 | 02:33 pm

It didn’t have to be this way, with Greece in default to the International Monetary Fund (IMF) and facing possible default on the European Central Bank (ECB) and consequently at risk of being forced to print its own money and exit the euro. The projections in my book last June showed the ratio of public […]

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Feasible Primary Fiscal Surpluses: Lessons from History

by | July 9th, 2015 | 02:33 pm

The ominous rise in debt-to-GDP ratios in Greece since 2010, and in the advanced economies after the global crisis of 2008–09, has rekindled interest in the historical experience of large samples of countries. Two important fiscal variables are interesting to consider in this regard: the primary fiscal surplus (i.e., the difference between fiscal revenues and […]

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Who Is Alexis Tsipras?

by | July 8th, 2015 | 04:35 pm

Despite widespread acceptance of the “big man” theory of history, individuals rarely make a personal and decisive difference in politics. But Prime Minister Alexis Tsipras of Greece is on the threshold of doing just that. He will soon decide whether to return his country to economic normalcy or crash it out of the euro and […]

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Brazil’s Fiscal Adjustment: Chronicle of a Death Foretold?

by | July 7th, 2015 | 03:59 pm

Is Brazil heading into a full-fledged fiscal crisis? Government officials say no, noting that President Dilma Rousseff, who has just completed a visit to Washington to try to repair ties with the United States, appointed an appropriately orthodox finance minister, Joaquim Levy, after winning re-election in 2014. Minister Levy announced an ambitious fiscal program for […]

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